Uncaged Bears and Rotary Phones

Originally published at The Hill

Every once in a while, someone comes up with an amusing article about obsolete laws that somehow have remained on the books for far too long. A law in Missouri, for example, apparently stated that it’s illegal to drive with an uncaged bear in the car.

The same exists in the telecom industry. The equivalent of the uncaged bear is a whole panoply of regulations that arose when Ma Bell was the monopoly telephone provider — and that meant rotary telephone, not your mobile device. Unlike some of the sillier laws still in place, antiquated regulations carry real costs in telecom.

The United States Telecom Association (USTA) has petitioned the Federal Communications Commission to “forbear” from enforcing obsolete regulations, precisely so companies can stop spending their dollars on complying with decades-old legacy rules and start spending even more dollars on bringing ever-faster broadband to homes and businesses. It’s sad, really, that the companies should even have to make such a petition. You’d think the FCC would want to do everything in its power to encourage high-speed broadband deployment. But today, the telcos have to spend Janus-like, facing both forward to broadband and backward to the narrowband era. In fact, according to a recent study, between 2006 and 2011, total spending by telephone companies on equipment totaled $154 billion. Shockingly, most of that expenditure was for maintaining the old circuit-switched telephone network, and the minority was devoted to the broadband technologies of the 21st century.
Consumers are fleeing the old network in droves. Only 5 percent use it exclusively, and another 28 percent use it in combination with a wireless service. Two-thirds of communications users have left the old network entirely. Every dollar telcos are required to spend on a network consumers are abandoning is a dollar not spent on deploying the modern networks that consumers prefer. Viewed in this light, the USTA plea for relief is entirely understandable — and it’s entirely justified.

FCC Chairman Tom Wheeler has said he wants more “meaningful competition” in high-speed broadband, particularly between telecom companies and cable providers. As Wheeler put it, these new broadband entrants are “well-positioned to give cable a run for its money, offering consumers greater choice.” This is exactly how it should work.

A while back, cable was the new kid on the block offering broadband and voice services; now, as Wheeler suggests, it’s the telcos’ turn to offer greater broadband competition. But for this to happen, regulatory relief is urgently needed. New entrants, such as wireless operators and cable, without regulatory restraint can devote their investments solely to the new technologies that consumers want, while telco spending by regulatory mandate remains anchored in the past. The best way to encourage telcos to become vibrant competitors with cable is to get rid of legacy rules where their very existence deters the kind of private-sector investment that everyone — including the government — wants to stimulate.

To make matters even worse, last week, President Obama urged the FCC to regulate consumer-based Internet services under the same rules that govern rotary telephones.  Applying antiquated regulations to broadband will further complicate the effort by the USTA and others to bring the nation’s communications regulations up to date. The specter of saddling broadband with obligations on pricing, entry and exit from the market and other legacy regulations has introduced greater uncertainty that may jeopardize our clear national goal to encourage greater broadband competition. In fact, this uncertainty resulted in AT&T announcing a “pause” in further broadband deployment, while it better understands the rules of the road for future broadband investment.

So whether the issue is legacy telephone rules from the monopoly era or the possibility of shackling today’s broadband providers (and Internet edge companies offering telecommunications-related services) with similar rules from decades ago, tell the president, the FCC and Congress not to keep rules that are unnecessary and that interfere with the fastest possible expansion of technologies that consumers want. We already have strong competition in broadband; fully adding the telcos would make that competition even stronger, to the benefit of consumers.

Oh, and by the way, you probably shouldn’t drive with an uncaged bear in your car. That legacy regulation actually might have made sense.